The European Times - Latvia

LATVIA

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Content

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LatviaContent

Regional Manager: Lieve Luyten

Country Director: Khayla BanksAukje Oostendorp

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INTRODUCTIONLong History as Economic and Cultural Crossroads 4•Prime Minister Highlights Latvia’s Investment •Potential 6Latvia’s Facts File 7•

BUSINESS & INVESTMENT OPPORTUNITIESStrategically Located Base for Business 9•One of Europe’s Fastest Growing Economies 10•Foreign Investors Council in Latvia 12•Manpower 13•British Chamber of Commerce in Latvia 14•

TRANSPORT & LOGISTICSBaltic Region’s Transport and Logistics Hub 16•Ministry of Transport 18•Embassy of France in Latvia 19•Latvian State Roads 20•

HEALTH CAREBringing Health-Care System Up to EU Standards 23•Boosting Private Sector’s Role in Health Care 24•Association of Latvian Chemical and •Pharmaceutical Industries 25Pauls Stradins Clinical University Hospital 26•

TRADE & INDUSTRYMaking Europe’s Best Kept Secret Better Known 29•Long History as a Trading Centre 30•British Embassy Promoting New Links between •UK and Latvia 32

TOURISMCarving out a Niche on the International •Tourism Map 34Grand Palace Hotel Riga 35•Hotel Riga 36•

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Latvia, located at the crossroads of northern and Eastern Europe on the east coast of the Baltic Sea, has long been a trade hub. Bounded by Estonia to the north, Russia and Belarus to the east and Lithuania to the south, Latvia also has a maritime border with Sweden to the west and is within easy reach of Finland, Poland and Germany. This strategic location has made Latvia a cultural and economic crossroads for centuries and is one reason the country has been attracting signifi cant international investment in recent years.

Powerful trade hub

The territory known today as Latvia has been inhabited since 9,000 BC and was settled by early Baltic tribes (the ancestors of today’s Latvians) in around 2,000 BC. The famous “route from the Vikings to the Greeks” mentioned in ancient chronicles stretched from Scandinavia through Latvian territory along the river Daugava to Russia and the Byzantine Empire.

Latvia has always been prized for its natural resources, and Latvian amber was known throughout the Greek and Roman empires. By 1282, Riga and later Cesis, Limbazi, Koknese and Valmiera were included in the northern German trading organisation, the Hanseatic League. Riga subse-quently became an important centre not only for east-west trade, but for the entire eastern Baltic region, developing close cultural contacts with Western Europe. The Daugava was the favoured trade route between Western Europe and Russia.

In the Middle Ages, Latvia was a collection of various tribes. One leader stands out from others: Semigallian Namejs, who is believed to have joined tribes together in 1286 to fi ght the invading German Livonian Order; the effort was unsuccessful.

The Livonian Order controlled Latvia until the 16th century when, following the Livonian War (1558-1583) between Russia and its western neighbours for control of present-day Latvia and Estonia, Latvia came under Polish-Lithuanian rule. In 1621, during the Polish-Swedish war (1600-1629), Latvia was divided: Latgale remained under Polish control,

Long History as Economic and Cultural CrossroadsRiga

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but Vidzeme and Riga came under Swedish rule. In the 17th century, the Couronians, Latgallians, Selonians, Semigalli-ans and part of the Livs first began to identify as a culturally unified nation – the Latvians (latvieši). In the 18th century, Russia took control of Latvia, but the country’s struggle for an identity continued and accelerated in the 19th century, culminating in the ‘Latvian Revolution’ in 1905.

First World War

During the First World War, a powerful pro-autonomy movement developed in Latvia, with the local intelligentsia supporting Russia and opposing Germany. After the war, on November 18, 1918, the independent Republic of Latvia was proclaimed. Soon afterwards, Latvia was invaded by the Russian army. Germany then recaptured Riga in 1919. In 1920 Latvia once again proclaimed its independence and signed a peace treaty with Russia. Latvia was recognised by European countries and admitted to the League of Nations.

By the 1930s, Latvia had achieved one of the highest standards of living in Europe, but this ended with the Second World War. After the war, Latvia came under Soviet rule and became an industrial powerhouse for the USSR as well as a trade base and a leading centre for education and research. During the Soviet occupation, around 340,000 people in Latvia were deported and otherwise persecuted.

Modern Latvia

After the USSR’s liberalisation (glasnost) and perestroika (restructuring) began in the 1980s, Latvia began to work

toward independence once again. In 1986, Latvians protested Soviet plans to build another hydroelectric power plant on the Daugava. The Latvian People’s Front (LPF) and the Latvian National Independence Movement (LNIM) gathered force against Soviet rule. On August 23, 1983, the People’s Fronts of all three Baltic countries held a huge political demonstration, The Baltic Way, a 600-km-long human chain from Tallinn through Riga to Vilnius to express the people’s united will for independ-ence. In August 1991, Latvia achieved its independence from the Soviet Union.

Latvia was quickly admitted to the United Nations, the European Organisation for Security and Co-operation, and the European Council, and in 1998 it became a member of the World Trade Organisation. Latvia has been steadily building a free market economy and achieved membership in the European Union and in NATO in 2004.

Latvia’s GDP rose steadily from independence until earlier this year, when the global financial crisis began to take its toll. Between independence and 2007, Latvia’s economy followed usual development trends in that the share of agriculture, hunting and forestry in total value added declined from 8.7% in 1995 to 3.2% in 2007, while manufac-turing’s share declined from 20.7% to 10.8%. Over the same period, the share of services rose from 60.6% to 74.7%. The role of the EU in Latvia’s foreign trade has strengthened sig-nificantly over the past decade: 76.1% of total exports from Latvia went to EU countries in 2007.

Today, Latvia is building on its many successes to secure sustainable long-term prosperity.

Long History as Economic and Cultural Crossroads© Kalvis Kalsers | Dreamstime.comRiga

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Introduction

Prime Minister Highlights Latvia’s Investment Potential

Latvia’s Prime Minister, Ivars Godmanis, discusses Latvia’s investment appeal.

ET: How would you describe Latvia’s investment potential?

I. Godmanis: Latvia has exceptional potential for investors. While it is a small county, it is now a member of the EU family and has very close trade and business relationships with the EU. Latvia provides port and logistics services for EU companies, and in addition the country has a wide range of high potential sectors, including forest products; forests cover 46% of the country. Other fast growing sectors include tourism, real estate and fi nancial services. Latvia has a diversifi ed economy that is not dependent on one or two sectors alone. The fi nancial sector, for example, includes 20 banks, mainly Scandinavian, German, Finnish and Serbian, and the level of service is very high.

ET: What are some specifi c opportu-nities for foreign direct investment?

Ivars Godmanis, Prime Minister

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I. Godmanis: Latvia has already attracted many major international companies, including Cemex, which has made the biggest foreign direct investment in Latvia to date. We have also seen signifi cant foreign investment in the telecommunications and transport sectors.

One upcoming opportunity is that Latvian State Roads is preparing an international public private partnership project designed to attract FDI, create jobs and improve the country’s infra-structure. Many tenders will soon be announced as well.

ET: What are some challenges Latvia is facing?

I. Godmanis: One of our main trade partners, Russia, is not part of the EU, which creates some problems. We are working to improve bi-lateral relations. We also registered high infl ation when foreign funding began to come into the country, but now our infl ation rate is going down. A key challenge for us at the moment is to fulfi l all the criteria for imple-menting the euro as our currency.

We expect to achieve this sometime in 2009.

ET: Why should investors choose Latvia over other countries in the region?

I. Godmanis: Latvia implemented a foreign investment law in 1991 to create a number of investment incentives, including tax breaks. We have a very liberal approach to foreign investment, and we also offer a labour force that costs less than the EU average yet includes highly educated workers thanks to Latvia’s traditional focus on education.

Latvia can also provide a very high level of services, all kinds of services, and Latvia’s geographic location is a major plus. This country already serves as a top logistics hub linking East and West. In addition, Latvia’s business sector is very open and transparent and the economy is stable.

7

Introduction

LATVIA

Latvia’s Fact FileArea: 64,589 sq. km

Total national border length: 1,862 km

Length of Latvia’s Baltic coastline: 494 km

Regions: Kurzeme, Zemgale, Vidzeme, Latgale

Population: 2.264 million (Oct ‘08)

Capital City: Riga

Ethnic Composition: Latvian (59.2%), Russian (28%), Belarusian (3.7%), Ukrainian (2.5%),

Polish (2.4%), Lithuanian (1.3%), Jewish (0.5%, other nationalities (2.4%)

Language: Latvian (offi cial; Russian, English and German widely spoken

Currency: Latvian lats (LVL), 1 lats consists of 100 santims

Type of Government: Democratic, parliamentary republic

Head of State: President Valdis Zatlers

Head of Government: Prime Minister Ivars Godmanis

Membership International Organisations: Member of NATO since 2004; Member of WTO since 1998, Member of

EU since 2004

Economy at a glance

GDP: €19,859.7 millionGrowth of GDP: 10.3%GDP per capita: €8,725

Private consumption (% of GDP): 64.8%Public consumption (% of GDP): 18.2%Growth of industrial production (% of GDP): 0.5%

Infl ation rate: 10.1%Rate of real wage growth: 19.9%Unemployment rate: 6%

Fiscal balance (% of GDP): -1.3%Current accounts: €-4,734.21 millionExports: €5,771.2 millionMain export countries: Lithuania, Estonia, Russia, Germany and SwedenImports: €10,076.84 million

Main import countries: Lithuania,Germany, Russia, Estonia and Poland

Government debt: €1,893.85 million

Foreign exchange reserves: €714.57 million

Exchange rate to €: €1 = LVL0.72399

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Business & Investment Opportunities

Strategically Located Base for Business •

One of Europe’s Fastest Growing Economies•

Chamber Promoting Transparent, Socially Responsible Business Ventures •

“Latvia’s accession to the EU and NATO changed our focus.”

Andris Laucins, Chairman Foreign Investors Council in Latvia

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According to the 2009 edition of the World Bank’s ‘Doing Business’ report, Latvia is ranked 29th among countries surveyed in both the ease of starting up and operating a business.

Latvia is very friendly to foreign companies. There are no controls on imports, exports, or use and conversion of foreign currencies, which facilitates investment and repatriation of profi ts. The corporate tax rate of 15% is one of the lowest in Europe, and the Latvian government has adopted modern laws establishing copyrights, patents and trademarks and the means for enforcing their protection. Telecommunication services have been modernised and the real estate market includes both modern housing and reasonably priced business venues.

One key attraction for investors is Latvia’s very strong fi nancial services sector, which is almost completely private and dominated by the foreign banking interests that account for more than 50% of the country’s commercial bank capital. This brings additional stability and reliability to the Latvian market.

Strategic base to access new markets

Thanks to Latvia’s strategic location, it particu-larly attracts investors looking for a base for further expansion eastwards or throughout the Baltic region. The good transport infrastructure and transit oppor-

LATVIA

tunities include three major ice-free ports, a growing international airport, and expanding road and railway networks, all of which have helped make Latvia a regional transport hub.

Latvia’s domestic market, although small (2.5 million inhabitants) is potentially attractive as well, particularly for IT equipment and services, capital machinery and equipment, and consumer products.

Latvia’s status as an EU member since 2004 is an additional draw for European investors, and the country also offers a highly-qualifi ed, educated and easily-adapt-able workforce speaking several languages and available at rates, which are by far lower than in most other European countries. English is the primary language for doing business.

The government has developed support programmes for enterprises for the period 2007-2013 which target centres of competence and technology transfer, technology and business creation, development of new products and services, development of the industrial areas used in business, development of small and medium sized enterprises, start-up and risk capital, and others.

Latvia’s regulatory environment gives foreign investors the same rights and obligations as Latvian investors. Now ranked sixth among the new EU states for FDI stock per capita, Latvia continues to enjoy high recognition among both regional and global FDI contributors, and the government is determined to retain Latvia’s reputation as an excellent base for business.

Strategically Located Base for Business

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Sector

One of Europe’s Fastest Growing EconomiesLatvia has made great strides forward in developing a thriving free market economy since the end of Soviet rule in 1991. The country’s GDP grew by around 9% per year between 2002 and 2007 and hit a record of more than 12% growth last year. As of 2007, Latvia’s per capita GDP is €5,478.

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A member of NATO and of the EU since 2004, Latvia aims to position itself as a key European trade hub linking markets in Europe, Scandinavia, Russia, the Baltic region and other former Soviet countries.

Key location on vital trade routes

Latvia has few natural resources besides the forests that cover almost 40% of its land area, and it imports all of its natural gas and oil, as well as part of its electricity. Its competitive advantages are its key location on vital East-West and North-South trade routes as well as its highly educated population (more than two-thirds of which live in the capital, Riga) and its increasingly effi cient infrastructure.

Latvia’s government has been productive in establishing the fundamentals for long-term growth. Thanks to early efforts toward liberalising the economy, for example, Latvia was the

Riga

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One of Europe’s Fastest Growing Economies


second country from the former Soviet Union to join the World Trade Organi-sation (in 1999).

Liberalised markets

Today, most of Latvia’s markets have been liberalised, privatisation is close to completion, and signifi cant advances in legal reform, institutional development, and social services continue to be implemented. Price liberalisation took place in most of the markets early in the transition and restrictions on foreign exchange transactions have been very limited. A clear focus on EU integration has had a strong positive effect on

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Latvia’s domestic policy, leading to broad political, economic, and social reforms.

2007’s more than 12% GDP growth was driven by strong domestic demand, rapid credit expansion, increasing investments (both domestic and foreign), sound income growth and the continuing stimulus provided by EU funds. The unemployment rate also declined to reach 6% in 2007 following double digit rates a few years earlier.

FDI crucial in economic success story

Foreign direct investment has been crucial to Latvia’s economic prosperity. Around 85% of the FDI coming into Latvia has been from EU countries. Thanks to this infl ux of foreign capital and know-how, Latvia now has a fi nancial sector ranked the strongest and most dynamic in the Baltic region as well as a fl ourishing high tech sector and a promising logistics sector. Concerning trade and investment, Latvia is concentrating more and more on adding value and diversifying its exports from the traditional timber and base metals.

Level playing fi eld for foreign investors

Latvia’s regulatory environment provides a level playing fi eld between domestic and foreign investors, who are offi cially represented by the Foreign Investors’ Council. The government has created numerous incentives for investors, ranging from support via EU structural funds to favourable legislation on depreciation and special economic zones. Latvia’s 15% corporate income tax, one of the lowest in the EU, is another key advantage. Latvia has also been upgrading conditions for doing business, and the World Bank survey ‘Doing Business in 2007: How to reform’ ranked the Latvian business environment 24th among 175 countries in 2006.

Both infl ation and the current account defi cit reached very high levels last year, however, and the economy began to cool down to a growth rate of around 10.3% in the last quarter. This year, GDP growth is expected to be around 1% to 2% and to remain modest in 2009. Expansion in manufacturing and exports will be decisive for the country to cope with this contraction phase of the economic cycle. Positive signs include decreasing infl ation in 2008, but the Bank of Latvia’s infl ation projection for the year still stands at 15.5%-15.8%.

Challenges to be faced

While analysts believe that this cool down is a welcome correction that will lead to moderation in private consumption and a return to more sustainable rates of economic growth, the economy still faces signifi cant challenges. These include the need to boost exports, secure the adoption of the euro (scheduled for 2008 and postponed due to high infl ation), complete ongoing structural reforms, improve public sector performance, raise the quality of social services and promote regional co-operation.

The EU commission recently reported that it was ready to step in to help Latvia get its economic growth back on track, commenting in October, “The EU stands ready to participate in a co-ordinated fi nancing package with the International Monetary Fund, conditional upon a strong commitment by the Latvian authorities to implement a rigorous and credible adjustment programme in order to underpin balance-of-payments sustain-ability in Latvia.”

The government has proved in the past its willingness to conform to EU criteria and to adapt to market changes, and is certain to continue to create investment incentives to attract more FDI.

1212


Foreign Investors Council in Latvia

Making Latvia More Investor FriendlyThe Foreign Investors Council in Latvia (FICIL), a non-govern-ment organisation, which began its activities in 1998, has been instrumental in making Latvia more investor friendly. Its guiding principles are to identify important issues affecting investors and the business sector and then to work with the government to improve the investment climate and solve any problems. FICIL does not lobby for any company or sector.

The organisation’s members are large companies from many countries and sectors that have made signifi cant investments in Latvia, as well as representatives from seven countries’ Chambers of Commerce active in the country. FICIL has six working groups focusing on the key issues of taxes, labour, transport and logistics, vision and strategies, the public procurement law amendments, and the macroeco-nomic situation.

FICIL has evolved over the years as Latvia’s economy has developed. As Andris Laucins, Chairman, explains, “At the very beginning, we mostly dealt with the development and implemen-tation of specifi c action plans which could facilitate business and improve the foreign investment environment. Latvia’s accession to the EU and NATO changed our

Andris Laucins, Chairman

LATVIA

focus, as this was a clear sign that the overall situation had improved signifi cantly. For the last couple of years, we have been working hand in hand with the Cabinet of Ministers and other governmen-tal institutions to forge long-term strategies.”

Evolving action plan

FICIL works closely with the Latvian Investment and Development Agency on an action plan to promote investment in Latvia. The plan includes new investor-friendly regulations, streamlined procedures, improved co-ordina-tion among various institutions, and the publication of crucial information, among many other initiatives. “The plan is a ‘living’ document since it is regularly updated and adapted,” Andris Laucins points out. He adds that tax issues, a public procurement law, transport policies and efforts to promote closer connections with Sweden’s energy infrastructure are among the most important matters currently covered in the action plan.

Overall, FICIL aims to help eliminate any barriers to foreign investment. Andris Laucins says, “The current legal and administra-tive system sometimes fails to keep up with the pace of investment development. The need for more predictability and transparency can slow down the development process, particularly concerning large Greenfi eld investments.

More tax relief and infrastructure development are also needed.” FICIL is contributing to fi nding solutions to these problems.

Through FICIL, member companies can infl uence the government’s approach to important issues, Andris Laucins explains. He says, “Our members have an impact on the current situation in Latvia.”

Foreign Investors Council in Latvia 13 Alberta Street,

Riga LV 1010, LatviaTel.: +371 67217201Fax: +371 67217202

www.fi cil.lv

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Manpower

International Human Resources Leader Provides Top Quality ServiceThe international Manpower human resources group has brought its proven expertise to Latvia and offers essential services to foreign fi rms operating there. Victoria Borodunova explains that multinationals make up around 80% of Manpower Latvia’s clientele. “These companies are generally not familiar with the Latvian market so they come to us for their staffi ng purposes. Our clients are very happy with the services we provide,” Anna Marchenko, Recruitment Manager, describes the human resources market in Latvia.

Manpower Latvia achieved turnover of LVL500,000 (709,040) in 2007 and has grown by 200% since it launched operations in 2006. It expects continued growth in 2008. The company works closely with the local state agencies and with specialised recruitment fi rms to satisfy its clients’ human resources needs.

Anna MarchenkoRecruitment Manager

Manpower,your partner

Manpower is always several steps aheadEffi cient recruiting process

Manpower

Own recruiting

Conventional companies

Conventional search companies

2-3 weeks

6-8 weeks

6-8 weeks

9-10 weeks


LATVIA

As in all its markets, Manpower operates according to the highest international standards and emphasises training for local human resources. Manpower views Latvia as a growth market. As Victoria Borodunova points out, “Latvia is an important hub not only for the Baltic region but for the former CIS countries. I am very sure that Manpower Latvia will continue to grow, since no other company in the Latvian market can equal Manpower’s 50 years of success.”

In the competition of the best, we can

help you recruit the people you need.

In situations where you quickly need

extra workforce, we can be your

buffer. In times of reorganisation,

we can be your consultants. In

the development

towards an

increasing focus of the

core business, we can take

over and operate the support

services.

1414


British Chamber of Commerce in Latvia

Chamber Promoting Transparent, Socially Responsible Business VenturesThe British Chamber of Commerce in Latvia (BCCL) brings Latvian and UK businesses together. Founded in 1996, the non-profi t organisa-tion now has over 150 members and lives up to its motto, “Proud to be associated with success.” Anita Kaleja, the Chairman of the BCCL, heads an elected board under which the Chamber has become a trendsetter by promoting transparent, socially responsible and fi nancially successful business activities.

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For UK companies in Latvia, BCCL offers crucial support services, including contacts with the Latvian Foreign Investors Council, the European Council of British Chambers of Commerce, the Latvian Investment and Development Agency, and the UK Trade and Investment section of the British Embassy.

The British Ambassador serves as the Honorary Chairman of the BCCL, and Ieva Gruzina is the asso-ciation’s Executive Director. She says, “We organise many events, both formal and informal, where business people can meet, compare notes, gather new information, and make business connections.” The BCCL also provides verifi ed business contacts in both countries and offers up-to-date information on business opportunities through its magazine and web site.

One of the BCCL’s priorities is to promote strong corporate responsi-bility. “We try to monitor companies investing in Latvia to make sure that they are transparent and adhere to the local legal framework so that they can serve as role models for Latvian companies,” Ieva Gruzina explains.

High-potential sectors

UK fi rms are increasingly targeting Latvia because of its qualifi ed human resources and strategic location. Ieva Gruzina says that sectors offering partic-ularly strong potential include furniture manufacturing, shipping, telecommu-nications and fi nancial services.

The BCCL regularly hosts seminars, discussions and other events throughout

British Chamber of Commercein Latvia

Kr. Valdemara str. 33, Offi ce 11Riga, LV-1010

Tel.: +371 67218043Fax: +371 67218045

www.bccl.lv

the year. Speakers at these events have included the President and Prime Minister of Latvia, the Prime Minister of Wales, the President of the Latvian Central Bank, leading journalists from The Economist, European Union offi cials, successful business leaders and others. The BCCL also organises an annual business mission to the UK and hosts trade and business delegations from the UK at least twice a year.

One of the BCCL’s goals is to encourage productive links between the private and public sectors, according to Ieva Gruzina. She adds that the BCCL is particularly involved in education, social responsibility, environmental issues and climate change.

Urging British fi rms to look into opportunities in Latvia, Ieva Gruzina concludes, “Latvia is an excellent place to do business, as any of our members will tell you. Foreign investment in Latvia is growing and Latvia’s position in the EU will be even stronger in the future.”

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Transport & Logistics

Baltic Region’s Transport and Logistics Hub•

Leading European Transport Hub•

French Investors Targeting Latvia•

“We anticipate strong growth in cargo transport and related growth

in Latvia’s distribution and logistics activities.”Ainars Slesers, Minister of Transport

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Baltic Region’s Transport and Logistics Hub

Latvia is the Baltic region’s transport and logistics leader. Along with its strategic location, which has made Latvia a trade hub for centuries, the country offers well-equipped international ports and a steadily expanding road and rail network as well as thriving air transport facilities and services. Transport, transit and storage combined account for almost 10% of Latvia’s GDP.

Port of Riga: 20 million tonnes of transhipped goods per year

Riga is Latvia’s main transport centre and has the country’s largest port. Latvia’s overall shipping traffi c is 90% tran-shipment, and the Port of Riga handles around 20 million tonnes of transhipped goods per year. Around 80% of the port’s freight turnover is in shipping services and the handling of transit cargo for former Soviet countries. The main goods supplied and transhipped through the Port of Riga are oil products, wood, coal, various kinds of metal, chemical fertilizers, chemicals and foodstuffs. More than 90% of all cargo containers transported through Latvia are loaded and unloaded in Riga.

Latvia’s two other key ports are in Liepaja and Ventspils, and the country also has seven smaller ports (Skulte, Mersrags, Salacgriva, Pavilosta, Roja, Lielupe and Engure) along its Baltic Sea coastline. The larger ports are mainly involved in processing transit freight, while smaller ports are mainly engaged in the shipment of timber and receipt of fi shing products as well as serving as yacht ports.

Ports operate as free zones

The ports of Riga and Ventspils have been operating as free economic zones for more than a decade, while the

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17


port of Liepaja is part of that city’s special economic zone (SEZ). All three ports offer vast undeveloped free zone building sites. Companies which operate in Latvia’s free ports and SEZs enjoy not only freedom from customs duties, excise tax and value-added tax, but also tax relief of up to 80% on corporate income tax and real estate tax.

A current priority for Latvia’s main ports is to develop logistics and dis-tribution centres which are focused on attracting freight from Asia and the Far East. Latvia can serve as a distribution centre for cargo from Asian countries, not only in the Baltic States but also in Russia and the CIS countries. State support is available for the development of infrastruc-ture, logistic centres, and qualitative operated customs warehouses. Foreign investment is welcome in these high-potential projects.

Highly developed rail network

Rail transport throughout Europe is being expanded as a means to protect the environment and to ensure speedier transit times than may be available by road. Most cargo to and from Latvian ports is already transported by rail, and around 52% of total cargo transport is by rail in Latvia. Most of the cargo transported by rail involves cargoes coming from Russia and Belarus to Latvia’s ports and from there on to other destina-tions; transhipment accounts for 75% of Latvia’s rail freight. Oil products, chemicals and mineral fertilizers are the main commodities transported

by rail in Latvia. Container train facilities linking Latvian ports with Russia and Kazakhstan are currently being developed. Latvia is using both state and European regional development funds to update its existing rolling stock and to purchase new equipment as well as to update the rail network overall. Latvia’s railway legislation is harmonised with that of the EU, and the rail sector has been fully liberalised. Latvia is currently involved in the Rail Baltica project with Poland, Lithuania and Estonia to create new rail links between the Baltic states and Central and Western Europe. The rail system offers a number of opportuni-ties for European equipment and services providers.

Road network being upgraded

Latvia also has a comprehensive road network totalling 20,309 km which is overseen by Latvian State Roads. The most signifi cant transport corridor traversing Latvia from north to south is the E67 motorway, also known as the Via Baltica, which provides links between Helsinki, Tallinn, Riga, Kaunas, Warsaw, and

the E77, from Riga to Kaliningrad and Gdansk.

Latvian State Roads is expanding and upgrading the road network through projects co-fi nanced by the Cohesion Fund of the European Union and the European Regional Development Fund. One project includes paving some 330 km of gravel roads. Latvian State Roads employs EU standards and aims to make Latvia’s road network one of the best in the region.

Riga International Baltic’s top air passenger hub

Latvia’s air transport is also well developed. Riga International Airport is the country’s leading air transport hub but there are also airports in Liepaja, Ventspils and Daugavpils. Riga International handles the most passenger traffi c of any airport in the Baltic region, and its passenger traffi c grew by 18.5% in January to September 2008 compared to the same period in 2007. The airport is currently being modernised and expanded. Latvia welcomes foreign investors and enterprises in its transport and logistics sector.

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Ministry of Transport

Leading European Transport Hub

Latvia’s transport sector offers outstanding investment potential, and the Ministry of Transport is working hard to make the sector’s attractions better known. As Ainars Slesers, Minister of Transport, points out, “Latvia does not have its own oil or gas, but it has a unique geographic location in this part of Europe. We are a small country but with access to a huge market. In addition, our people have extensive experience with the Russian market as well as with other markets throughout the region.”

Latvia’s transport sector has already implemented EU standards, and around 70% of Latvia’s trade is with EU member states. Latvia achieved exports of more than 50 million tonnes of cargo last year, and according to Ainars Slesers that total could rise to 100 million tonnes by 2015. “We see the possibility of handling around seven million containers per year, and we are working hard to develop new cargo terminals. We anticipate strong growth in cargo transport and related growth in Latvia’s distribution and logistics activities,” he says.

Investing in infrastructure

The ministry has allocated signifi cant new investment in the country’s transport infrastructure, including upgrading East-West rail links, building new highways to serve Latvia’s ports, and upgrading Latvia’s portion of the European road corridor linking Latvia to Germany, Poland, Lithuania and Russia. “This corridor is getting quite busy, which I call a positive problem. In the short term it is a problem, but in the long term it is a positive since it refl ects Latvia’s importance as a link between the EU and Russia. Of course, the only way to bring containers from Russia to the EU is through Latvia,” Ainars Slesers points out.

Latvia is also investing in upgrading its ports, distribu-tion and logistics centres, and air transport facilities, including a €200 million investment between now and 2012 in the expansion of Riga International Airport, the fastest growing airport in Europe. Ainars Slesers

Ainars Slesers, Minister of Transport

LATVIA

says that a key goal is to boost the added value of the country’s transport services, including the processing and storage of containers travelling from Asia to European markets via Latvia.

The minister urges European investors to get involved in Latvia’s transport sector. “This is the right time and the right place to make investments that are sure to bring attractive returns,” he says, adding that in the future Latvia will be for Europe what Hong Kong is for Asia: a top business, entertainment and tourism hub.

Ministry of TransportGogola iela 3, Riga, LV-1743, LATVIA

Tel.: +371 67028205 - Fax: +371 67820630

19


Embassy of France in Latvia

French Investors Targeting Latvia

French investors are increasingly targeting Latvia, and the French Embassy in Riga aims to be their fi rst point of contact in this high potential market. Pascal Fieschi, France’s Ambassador to Latvia, explains that Latvia offers signifi cant investment attractions. “Latvia has highly skilled, multilingual human resources, and since it is now a member of the EU, it has implemented EU regulations. This gives investors reasons for confi dence,” he says.

One of Latvia’s key advantages for French investors is its location, which makes Latvia a natural gateway to the Baltic region, Russia and the former Soviet Union countries. The Ambassador also praises Latvia’s commitment to environmental protection and the government’s drive to reduce red tape. He adds, “There are still some delays in crossing the border between Russia and Latvia, but Latvia’s Ministry of Transport is working hard to develop the country’s railways and all its infra-structure to ensure more effi ciency and better quality transport.”

Daily fl ight between Paris and Riga

The French Embassy aims to strengthen ties between France and Latvia and regularly hosts visits by French business leaders. Pascal Fieschi welcomes French investors to visit Latvia and see for themselves what the country has to offer. He notes that a French school is being established in Latvia and that “French people can feel at home here.” Getting to Latvia has never been easier now that Air Baltic operates a daily fl ight between Paris and Riga.

Pascal Fieschi, France’s Ambassador to Latvia

LATVIA

Many French companies have already invested in Latvia: French manufac-turing enterprises and representative offi ces in Latvia now contribute €40 million to Latvia’s FDI, Pascal Fieschi explains. Axon, Schneider, Gefco, L’Oréal, Sanofi , Danone, Veolia, Société Générale and other fi nancial services fi rms are among the French companies present in Latvia, and trade between the two countries is growing.

High potential sectors

Infrastructure, transport (including railway signaling), and energy (particularly urban heating systems and electricity) are among the investment possibili-ties in Latvia that offer particularly strong potential, according to the Ambassador. “Our investors from France can be part of tenders for further development of Latvia’s transport sector,” he suggests.

Pascal Fieschi concludes, “It is very important for French companies to know more about Latvia. We are quite confi dent that Latvia can overcome the current economic crisis. Although Latvia’s domestic market is small, purchasing power is increasing, and there are signifi cant opportunities to gain market share. Latvia can become a very important player in the EU market.”

Embassy of France in Latvia9, Boulevard RainisRiga LV-1050 Latvia

Tel.: +371 67 03 66 40Fax: +371 67 03 66 47

www.missioneco.org/lettonie

2020


Latvian State Roads

Building Better Roads with Private Sector PartnersLatvian State Roads (LSR) is a state owned company responsible for managing and maintaining Latvia’s state road network, which now covers more than 20,000 km of roads. LSR now has 26 management units throughout the country and employs 400 people.

One of the organisation’s responsi-bilities is to allocate funding for road construction and maintenance. Talis Straume, Chairman of the Board, explains that Latvia has received around €356 million from EU Cohesion Funds to be used for major roads leading toward EU markets. In addition, Latvia is the recipient of around €299 million in regional funding to develop a state road network and an additional €327 million in state funds through the Ministry of Transport.

Public-private partnerships

To fi nance additional road con-struction, LSR plans to launch public-private partnerships; these represent outstanding opportu-nities for foreign investors. Talis Straume estimates that these pub-lic-private projects will have a total value of around €1,45 billion.

LSR has several projects underway or planned for the near future, including a new road to Riga International Airport and a bypass motorway network around Riga. LSR has formed its fi rst partnership

LATVIA

with the private sector to move the motorways project forward, and it is scheduled to begin at the end of 2009.

Talis Straume adds that the Ministry of Transport has launched an ambitious programme to involve private sector participation in upgrading Latvia’s road infrastruc-ture through design-build-fi nance-maintain schemes, long-term service contracts, and support from private investors.

International tenders for key projects

LSR also has six other major projects under development. These include a new connection leading from Riga toward western Europe, better road connections to Jelgava, an upgraded 60 km road connection between Riga and Ventspils (one of Latvia’s main ports), and a new road on the route to Moscow. These important projects represent opportunities for inter-national companies. Talis Straume explains, “We have encountered some problems in terms of fi nancing these projects, so we will open these projects to international tenders next year.”

Intelligent transport systems

LSR aims to employ a wide range of techniques and materials to upgrade its existing road network. “We need to make improvements in general road conditions, information systems, signaling and traffi c safety. In addition, around 70% of Latvia’s

Latvian State Roads3, Gogola Str.

Riga, LV-1050 LATVIATel.: +371 7028168Fax: +371 7028171

www.lvceli.lv

Talis Straume, Chairman of the Board

roads are gravel and need to be paved, a priority project that will cost around €2,13 billion. We are also focused on implementing intelligent transport systems,” Talis Straume says. Foreign participation in such projects is welcome.

21

Who may be contacted regarding questions or unclear issues?

Complete information may be obtained from the PPP Projects Department of SJSC

“Latvian State Roads” at Riga, 7/9 Tornu Street. Your questions will be answered by:

Mr. Juris Taurins, Head of Department

Phone +371 67036435 [email protected]

Ms. Zaiga Steina, Project Manager


Mr. Zigmars Krumins, Project Manager


PPP Project Programme in Latvia

No. Project Evolution of PPP and resolution of the Cabinet of Ministers

Preparation of procurement documents, procurement, contract

Investment period

1. Riga Bypass - Senite 2007 2007 – 2009 2009 – 2012

2. Riga Bypass 2008 2008 – 2011 2011 – 2014

3. Kekava Bypass 2008 2008 – 2011 2011 – 2014

4. Priedaine - Sloka 2010 2011 – 2013 2014 – 2017

5. Riga - Jelgava 2009 2010 – 2013 2013 – 2016

6. Riga Bypass - Koknese 2010 2011 – 2013 2014 – 2017

22

Health Care

Bringing Health-Care System Up to EU Standards•

Boosting Private Sector’s Role in Health Care•

“No nation can survive without good health-care services, and

demand is growing in Latvia for more and better services.”

Ivars Eglitis, Minister of Health

23

Health Care

Bringing Health-Care System Up to EU Standards

Since Latvia’s independence, the government has been working hard to bring the country’s health-care system up to EU standards.

LATVIA

The state is increasingly separating primary and secondary healthcare and is encouraging primary care services providers to register as independent contractors. Concerning state-run institutions, a top priority at present is to improve management capacity and information systems.

Other key goals are to retrain specialist physicians into GPs to meet growing demand, upgrade the process of certifying healthcare professionals and ensure the entry of more healthcare professionals (especially nurses) into the workforce, and continue to reform the country’s hospital system. Outpatient services have been increasing rapidly while the number of hospitals has been reduced. The government is currently exploring possibilities for private investment in health-care infrastructure and technologies.

High potential pharmaceuticals sector

Latvia’s pharmaceuticals sector represents signifi cant investment potential. Latvia’s long experience and traditions in chemicals manufacturing, along with its strong manufacturing base and high-level research and development competence, make the country’s chemical sector overall, including pharmaceuticals, particularly attractive for business activities. Latvia was the Soviet Union’s main base for the manufacture of chemicals and pharmaceuticals products, with 25% of all new Soviet drug technology developed there.

In fact, recent surveys rank Latvia’s pharmaceuticals sector among the top fi ve in Central and Eastern Europe in growth potential. Key benefi ts of operating in the Latvian pharma-ceutical market include a steady forecast growth over the coming fi ve years, a high percentage of urbanised and pensionable population, and access to growing regional markets.

Imported pharmaceuticals

Pharmaceuticals account for 37% of Latvia’s chemicals exports, but the country is also a top market for imported pharmaceuticals, which account for 85% to 90% of total pharmaceutical consumption. Around 50% to 75% of prescription medicines are fully or partially reimbursed through Latvia’s Compulsory Health Insurance Agency, which administers all state health-care funding; over the counter drugs are not reimbursed in this scheme.

Funding for health care is a crucial issue. Among the ten new EU member states, Latvia spends the lowest percentage of its GDP on healthcare. The Ministry of Health is currently developing two strategic documents, one for compulsory state health insurance and the other for a minimum basket of healthcare services to be provided by the state. The government has also implemented a “Healthy Nutrition 2003 – 2013” campaign and is creating programmes to cope with long-term illnesses.

Source: Central Statistical Bureau of Latvia, 2008

© Johann Helgason | Dreamstime.com

Chemicals Exports, 2004-2007 (in millions of euros)

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2424

Health Care

Boosting Private Sector’s Role in Health Care Latvia’s Ministry of Health has determined a clear game plan for developing Latvia’s health sector. Ivars Eglitis, Minister of Health, explains that key goals for the ministry include improving the system of fi nancing for hospital care, creating new oncology services, and upgrading the quality and availability of outpatient care.

Private sector to fi ll the funding gap

A major constraint for Latvia’s health care sector is that only around 3.8% of the country’s GDP is devoted to health care development. “In other countries, the percentage is usually around 7%. We want the private sector to help fi ll this gap. We welcome the involvement of private investors and private service providers in Latvia’s health care sector. The government is aware that it cannot achieve its goals alone,” the minister explains. Latvia is receiving funding support from the EU to develop its health care sector and is open for other foreign assistance.

Urging foreign investors and health care providers to explore opportunities in Latvia, the minister says, “No nation can survive without good health-care services, and demand is growing in Latvia for more and better services. There is an excellent potential for foreign investors here.”

The Ministry supports projects to bring global health-care experts to Latvia, including an international conference held in June this year at Riga Eastern University Hospital on the important issue of hospital reorganisation, development and management. Health-care profes-sionals from Norway, Finland and Estonia attended the conference to share their ideas with their Latvian colleagues.

High-quality human resources

While it is facing many challenges, Latvia’s health-care sector also has a number of strengths, particularly its highly trained human resources. “We have very strong expertise in the fi eld of cardiology, for example. In

Ivars Eglitis, Minister of Health

LATVIA

addition, Latvia is known for its high quality dentistry and plastic surgery. Many European patients from other countries come here for treatment because they can have excellent care at lower prices,” Ivars Eglitis points out.

In fi ve years, the minister expects that private participation in Latvia’s health care sector will have increased and that the sector’s liberalisation will have grown, with the government focusing on providing emergency and primary care while the private sector will be taking on more responsibility for secondary care in particular. “We hope to see the standards of both primary and secondary care improved signifi cantly over the next fi ve years,” Ivars Eglitis concludes.

72, Brivibas street, Riga, 1011, LATVIATel.: +371 678 76000, Fax: +371 678 76006

www.vm.gov.lv

25

Health Care

Association of Latvian Chemical and Pharmaceutical Industries

Pharmaceuticals and Chemicals Industries Offer Strong Investment PotentialWith a competitive advantage over other Baltic states, Latvia is a long-term leader in the pharmaceu-ticals and chemicals sectors, and the Association of Latvian Chemical and Pharmaceutical Industries aims to enhance Latvia’s role in these industries in the future.

As Vitalijs Skrivelis, Chairman of the Association, explains, “Latvia was the main research and production centre for pharmaceuticals for the Soviet Union until the 1990s, and it is ideally placed to support a successful pharma-ceuticals sector now and in the future. Concerning the chemicals industry, Latvia is building on its excellent human resources and traditions in research and development, especially the possibility to create innovative new products.”

80% of Latvian pharmaceuti-cals are exported

Latvia’s pharmaceuticals sector benefi ts from highly trained human resources and an excellent track record in exports. In fact, around 80% of Latvia’s pharmaceuticals production is for export, according to Vitalijs Skrivelis.

As for the chemicals sector, Latvia is concentrating on high value added products. Vitalijs Skrivelis explains, “We do not have many natural resources, so the logical step for Latvia’s chemicals industry is to focus on specifi c, complex, multi-step organic synthesis products. The

Vitalijs Skrivelis, Chairman of the Association

LATVIA

industry is also focusing on biotechnol-ogy products and research, including stem-cell research.”

Latvia’s chemicals industry offers outstanding investment potential. As Vitalijs Skrivelis says, “There are opportunities in the industry because Latvia has a history of developing many innovative products, including synthetic cardiovascular and anti-cancer drugs, artifi cial vaccines based on viruses, and more. The EU has funded the modern-isation of laboratories in Latvia to foster efforts in organic chemistry, medical research, biotechnology and stem-cell research.”

International partnerships

To enhance the international presence of Latvian pharmaceuticals and chemicals fi rms, the Association is participating in a number of interna-tional programs, particularly with its neighbours in the Baltic as well as with Sweden, Norway and Poland.

Vitalijs Skrivelis adds that the Association is currently working to promote “cross industry collaboration” in which phar-maceuticals fi rms work with companies in the food industry to develop and produce what he calls ‘nutra-ceuticals’ and ‘functional food’, for example vitamin enriched yogurt and bio cultures. Several co-industry projects with IT and machinery producers are in progress as well.

Both the pharmaceuticals and chemicals industries in Latvia are investing in new technologies and in automation to boost their capacity and competitiveness.

Association of Latvian Chemical and Pharmaceutical Industry

Brivibas Str. 40-41/ Riga, LV-1050Tel: +371 67298693Fax: +371 67298693

www.lakifa.lv

A key role for the Association is to “act as a watch dog for proper implementa-tion of EU legislation, and to represent members’ interests in government institutions, to ensure the development of the industry,” Vitalijs Skrivelis says. He adds that Latvia’s pharmaceuticals and chemicals fi rms welcome foreign investment, technology exchange and know-how, and that Latvia can serve as the ideal springboard for interna-tional fi rms wishing to enter the fast-growing Russian market. “Foreign investors will benefi t from co-operation with Latvian chemicals and pharma-ceuticals companies, for example in niche research and development,” he concludes.

2626

Health Care

Pauls Stradins Clinical University Hospital

Latvia’s Leading Teaching and Research Hospital

Pauls Stradins Clinical University Hospital is Latvia’s leading teaching and research hospital. It is the fi rst choice in the country for cardiac surgery, invasive cardiology and heart, kidney and liver transplants, and is known for pioneering innovative new procedures. Seventy-four successful kidney transplants were performed at the hospital last year alone. Recently, the fi rst successful cell transplant was performed at the hospital. “We look forward to continuing to serve as Latvia’s top 21st century hospital, par-ticularly in the areas of patient care, research and administration,” says Chairman of the Board Arnolds A. Veinbergs, M.D.

Latest technologies, top quality medical professionals

The hospital has over 1,020 beds and employs a staff of 3,185. It includes eight clinics, two institutes, several medical units, and 16 specialised centres, which include the Latvian Transplant Centre, the Latvian Cardiology Centre, the Centre of Dentistry and Facial Surgery, and the Centre for Sexually Transmitted and Skin Diseases. “All our services have been equipped with the newest and safest technologies and all our medical staff members are highly trained professionals,” Arnolds A. Veinbergs says. The hospital focuses on attracting the best physicians and medical staff, and has instituted an innovative payment scheme to further motivate top surgeons and physicians to practice there.

History of innovation in medical care

The hospital is named for Professor Pauls Stradins, M.D., who was instru-mental in upgrading the quality of medical care and services in Latvia throughout his career. Founder of Latvia’s fi rst cancer hospital and of Riga’s second medical school in 1939, he served as head physician at Riga 2nd City Hospital in the 1940s, and oversaw the expansion of the hospital, which was renamed the Clinical Hospital of the Republic.

Professor Pauls Stradins was dedicated to introducing the latest techniques in diagnostics and treatment, improving techniques in

Arnolds A. Veinbergs, Chairman of the Board

LATVIA

the operating theatre, and promoting innovative treatments and procedures concerning oncology, blood tranfusions, heart and blood vessel surgery, lung surgery, anesthesiology, reanimatology, chemotherapy and other fi elds. He founded the Latvian Science Academy Institute of Biology and Experimen-tal Medicine in 1946 and served as the head of Latvia’s medical board within the Ministry of Health. He was known as Latvia’s leading surgeon and oncologist.

International tenders for major expansion project

The hospital in Professor Pauls Stradins’ name continues to carry on the tradition he established of focusing on the latest techniques and technologies and on promoting innovation. To keep its facilities and services world class, the hospital recently announced that it is organising international tenders for medical equipment fi rms, hotel and property developers, and construc-tion and infrastructure companies to handle a signifi cant expansion project that the hospital plans with the support of Latvia’s Ministry of Health.

Hospital to serve as leading national and regional health centre

The government welcomes foreign participation in this new project. “Minister of Health Ivars Eglitis aims for Pauls Stradins Clinical University Hospital to serve not only as Latvia’s national hospital but also as the

© I

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rede

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27

leading clinical research hospital in the region. The hospital’s current infrastructure cannot accommodate this vision, so we plan to expand by 130,000 sq m and to create two new buildings in the shape of intertwined snakes, the international symbol for medicine,” Professor Arnolds A. Veinbergs explains.

The first phase of the expansion project will include around 70,000 sq m and the second around 60,000 sq m. JKMM Architects of Helsinki, Finland won the competition to design the overall vision for the expansion. The hospital is set on around 16 hectares of land about 3 km southeast of Riga’s city centre and about 5 km from Riga Interna-tional Airport, and offers significant room for new construction. Most of the hospital’s current structures date from 1910 to 1914, an architectural heritage that the expansion project will preserve.

Protecting natural setting

The hospital is surrounded by a vast park, and guiding principles of the expansion project include protecting the natural beauty of the hospital’s setting as well as finding new ways to help visitors and patients benefit from the hospital’s park and gardens.

In addition to cutting-edge facilities for medical treatment, education and

research, the expansion project will include new parking areas, improved pedestrian infrastructure, children’s play areas, flexible spaces that can be adapted for various uses, new recreational areas, and landscaped gardens. The hospital’s building land will be zoned to ensure that any new construction meets the highest local and international development standards.

Focus on human scale

Overall, the expansion of Pauls Stradins hospital will “be based on lasting human principles.

Hospitals of the future should not be like busy shopping malls or fancy airports. Rather, they should be designed with an emphasis on making the scale and spaces more people-friendly, and bringing nature into the architec-tural design,” states the hospital’s development plan.

The expansion of Pauls Stradins Clinical University Hospital will build on this innovative institution’s stellar reputation to position the hospital as a cutting-edge regional medical centre that always keeps the needs of its patients in mind.

28

Trade & Industry

Making Europe’s Best Kept Secret Better Known •

Long History as a Trading Centre•

British Embassy Promotion New Links Between UK and Latvia•

“Our priorities are climate change and energy security,

promoting Latvia’s EU integration and economic diversity and facilitating

increased defence and trade co-operation.”

Richard Moon, British Ambassador

29

Trade & Industry

Making Europe’s Best Kept Secret Better KnownThe Latvian Institute, mandated by the government to provide information and promote knowledge about Latvia to the international community, is helping to communicate “the big picture” of Latvia for potential visitors, according to Ojars Kalnins, Director.

That picture is a very attractive one. Latvia combines the historic architec-ture, lively cultural scene, exceptional shopping, clean and orderly streets, and thriving business activities of Riga and other major cities with unspoiled forest covering half the country and 500 km of beach -- Europe’s longest -- just outside the capital.

Europe’s longest beach

In fact, Latvia’s unspoiled nature is one of its key attractions, and one that “will be an even greater commodity in the future,” Ojars Kalnins believes. “The Latvian Institute recognises,” he says, “that while many people have heard of Riga, Latvia as a whole is sort of the best-kept secret in Europe.” The Latvian Institute hopes to change that by making the country’s strong points better known.

Ojars Kalnins, Director Latvian Institute

LATVIA

The Latvian Institute maintains a web site with all kinds of information on the country for potential business or leisure visitors. The site gives the latest information on festivals and other current events, specifi c facts and fi gures about Latvia, information about Latvian culture and customs, and practical information for travellers.

A small country with a very strategic location on the Baltic, Latvia has a long history as a trade hub and this history is refl ected in the country’s very inter-nationally oriented culture. “Latvians have learned over the years to be mul-tilingual and very good at adapting to new situations. We have noticed that Latvian companies working outside the country succeed because they are open to different cultures,” Ojars Kalnins explains.

Detailed information on economy

For potential investors, the Latvian Institute’s web site provides a wealth of links to up-to-date information on the Latvian economy and on the performance of various sectors, including the fact that Latvia’s economy has achieved the highest growth rates of any EU country. The Institute

can also help arrange meetings with government and private sector leaders to help potential investors get their projects on track.

The Latvian Institute publishes print and video materials in many languages and has a special service for journalists. For travellers looking for guidance on what to see and do in Latvia, the Latvian Institute is the best choice. “You could almost say we serve as an ad agency. We are promoting Latvia,” Ojars Kalnins points out.

Latvian InstituteKalku str. 7 (4th fl oor)Riga, LV 1050, LatviaTel.: +371 6750 3663Fax: +371 6750 3669

www.li.lv

3030

Sector

Long History as a Trading CentreSince the 14th century, Latvia has been a major commercial hub for the Baltic region and beyond, and was at the centre of the Hanseatic League, the world’s fi rst free trade area. Today, Latvia has earned the record for achieving the fastest foreign trade growth of all Baltic and EU countries.

LATVIA

With its accession to the EU in 2004, Latvia became a member of the European Trade and Customs Union, enhancing its attractions as a base for trade-oriented industries. The country has also been a member of the World Trade Organisation since 1999. Concerning trade with other EU members, goods that either originate in any of the old or new member states, or products coming from a third country which are considered to be in free circulation in a member state, are now fully eligible for free intra-community circulation.

To boost its trade activities, Latvia has been investing its state funds as well as EU funding in expanding its transport infrastructure. Latvia is already a leading centre for tran-shipment trade between Russia and other former Soviet Union countries, the Baltic region and Europe. It is aiming to develop

new logistics centres that will tap into growing trade between Europe and Asia.

LIDA helping investors find opportunities

The Latvian Investment and Development Agency (LIDA) is playing a key role in attracting new investment in Latvia’s industrial and trade sectors and in assisting foreign investors. It is currently promoting investments in Liepaja, Latvia’s third largest city and one of the few ice-free ports in the Baltic. Liepaja is a Special Economic Zone area offering signifi cant tax rebates on investments. LIDA also helped to attract Leax Baltix, a branch of Swedish metal working company Leax Group, which recently opened a new €5 million factory in Rezekne, its second industrial facility in Latvia. LIDA is an essential source of information about new investment opportunities.

31

Trade & Industry

Export totals growing

According to the Central Statistical Bureau, in the period January to September 2008, Latvia’s exports at current prices reached 4.7 billion, an increase of 13.9% compared to the same period in 2007, with almost all commodity groups showing growth: base metals and products rose 42%, agriculture and food products rose 26.7%, transport vehicles rose 26.6%, and chemicals and allied industries rose by 23.6. However, exports of wood and wood products decreased by 14.5% and exports of textiles and textile articles by 10.9%. Most of the exports during the first nine months of 2008 were to Lithuania

LATVIA

(17%), Estonia (13.5%), Russia (10%), Germany (8.1%) and Sweden (7%).

Meanwhile, Latvia imported in total 134.13 million, a 6% decrease compared to the same period in 2007. Imports of wood and wood products, transport vehicles, machinery and appliances, electrical equipment, and building materials all declined, while imports of mineral products, agricultural and food products, chemicals and allied products, and base metals and products all rose. Latvia’s main sources of imports during the first nine months of 2008 were Lithuania (16.6%), Germany (13.3%), Russia (10.1%), Estonia (7.1%) and Poland (7%).

Varied industrial activities

Latvia’s industrial activities include wood processing, which accounts for around one-fifth of Latvia’s total value-added manufacturing. This sector has shown the fastest growth of any manufacturing sector since 1991, nearly tripling its output. A rise in domestic demand has stimulated growth in this sector.

The food industry is Latvia’s second biggest manufacturing sector and accounts for one-fi fth of total manufacturing value added. Approximately 75% of the total food industry output is consumed in the domestic market, with the rest exported mostly to Estonia, Lithuania and Russia, although exports of Latvia’s food products to EU member states have risen more than 1.5 times since 2004, mostly due to the increased demand in Estonia and Lithuania.

The production of machinery and equipment is a rapidly growing sector, and its production volumes have almost doubled in the last fi ve years; three-fourths of the products in this sector are exported to the EU, mainly Lithuania and Estonia.

Latvia’s chemical industry is another thriving sector, based on the country’s long history as a centre for chemicals research, development and production during the Soviet years. The chemical industry accounts for approximately 7% of the total value added of Latvia’s manufacturing. Traditional markets for Latvian chemicals products are CIS countries, Lithuania and Estonia.

Latvia also has a well-developed not-metallic-min-erals sector, mainly construction materials, which grew by 15.3% in 2002 but has been seeing slower growth since then. The country’s metals manufactur-ing has been growing steadily, with around 80% of production being exported. Light industry (mainly the production of textiles and leather products) makes up less than 8% of Latvia’s total value-added manufacturing. Three-fourths of the production in this sector is exported to EU member states.

Enterprises in a wide range of industries will find outstanding opportunities in Latvia.

Exports in 2008Imports in 2008

16.6% 17%

13.3% 13.5%

10.1% 10%

7% 7%

7.1% 8.1%

Lithuania LithuaniaGermany EstoniaRussia RussiaEstonia Germany

Poland Sweden

3232

Trade & Industry

British Embassy Promoting New Links between UK and Latvia

Richard Moon, British Ambassador to Latvia, is dedicated to promoting more ties between Latvia and the UK. As he points out, “The British Embassy in Riga offers a wide range of services to help facilitate any UK company’s entry into the Latvian market. Our priorities are climate change and energy security, promoting Latvia’s EU integration and economic diversity, and facilitating increased defence and trade co-operation.”

Networking on behalf of business is one of the embassy’s key activities. The embassy pairs up UK companies with Latvian fi rms in the same sectors and organises business related and social events. “We aim to benefi t companies from both countries as well as to bring to the attention of Latvian authorities the great potential of increased ties between Latvia and the UK,” the Ambassador says.

Focus on “green” initiatives

The environment is one key focus for the British Embassy in Latvia, which works closely with the Latvian Ministry of the Environment and supports the Challenge Europe project on climate change. Last year the embassy sponsored the Wilton Park Conference on Energy Security in Riga as well as a Green Triathlon and a poster exhibition on the theme of climate change. “Our fl agship project this year was an event in Riga in October on the economic benefi ts to business of adopting ‘green’ policies. Our partners will be the UK’s Confederation of British Industry and the Carbon Trust, the British Chamber of Commerce in Latvia, the Latvian Ministry of Environment, and the Federation of Latvian Employers,” Ambassador Moon says.

More and more UK companies are making their mark in Latvia, and British fi rm Fletcher-Priest was recently chosen from among 1,000 entries to handle a major development project in Riga. “This is a very exciting project to redevelop an area along the left bank of

Richard Moon, British Ambassador

LATVIA

the Daugava river that will extend the city centre,” the ambassador says. The project will include a new railway station, a transport interchange and new streets, as well as squares, housing and business developments.

Projects like these refl ect Latvia’s potential for UK fi rms. Ambassador Moon says, “Co-operation between Latvia and the UK far extends the work channelled through the embassy. There is good direct co-operation between government institutions and organisations, as well as extensive business-to-business and people-to-people contact. I think there is still a lot of potential here in Latvia. In fact, I think the best is still to come.”

5 J Alumana Street, Riga,

LV – 1010

Tel.: +371 777 4700

Fax: +371 777 4707

www.britain.lv

33

Tourism

Carving out a Niche on the International Tourism Map•

3434

Tourism

Carving out a Niche on the International Tourism MapLatvia enjoys a favourable geo-graphical position, a rich historic and cultural heritage, unspoiled nature, hospitable people, cost-effective labour and one of the fastest growing economies in Europe, all of which make the country’s tourism sector an attractive investment choice.

One of Europe’s oldest cities

In fact, Latvia is one of Europe’s great undiscovered treasures, certain to make a place for itself on the interna-tional tourism map. Riga, the country’s historic capital, is one of Europe’s oldest cities, fi lled with picturesque medieval buildings that include Riga Castle, dating from 1330.

In addition to its architectural heritage, Riga offers a lively cultural life. Throughout the year, visitors will fi nd concerts, theatre, art galleries, special events, and the Latvian National Opera, considered one of Europe’s best opera companies. The city’s many prestigious museums include the History Museum of Latvia, which gives visitors a look at Latvia from the Stone Age to the present. Riga is also fi lled with restaurants, nightclubs, cafés and stylish boutiques. The city’s hotel scene now includes luxury properties and smaller boutique hotels, with new hotels opening every year.

State-of-the-art business services

As more and more international investors travel to Latvia to explore

business opportunities there, services for business travellers have been expanded and upgraded. Business services are already up to date in Riga’s best hotels, which benefi t from Latvia’s very advanced telecommuni-cations infrastructure. Riga’s interna-tional airport is being enlarged to serve fast growing numbers of visitors, and new direct fl ights, including via low cost Ryan Air, make Latvia even more accessible from cities all over Europe and beyond.

Latvia is working hard to attract more of the fast growing international meetings, incentives, conferences and events (MICE) tourism segment. World-class meeting facilities are available in leading hotels, in the World Trade Centre and in the Riga Congress Centre, which is a member of the International Congress and Convention Association. The Riga Latvian Society hosts all types of events at its well-equipped facility, and more conference facilities are to be developed.

Visitor numbers growing

Latvia’s visitor numbers are growing, as are the numbers of visitors choosing to stay longer. Most of Latvia’s tourism visitors come from neigh-bouring countries, mainly Lithuania, Estonia, the Russian Federation, Finland, Germany, and other Baltic countries. The government is working to attract visitors from new markets by stepping up Latvia’s tourism marketing activities and its presence in international tourism-related events.

EU Regional Development Fund supports tourism projects

To help Latvia make the most of its tourism potential, the country is to receive a total of €42 million from the EU Regional Development Fund between 2005 and 2012 specifi cally for the development of travel and tourism facilities and services. The government is targeting fi ve priority areas for this investment: health resort tourism based on Latvia’s natural spas; cultural tourism and the reconstruction of historical tourist attractions; active tourism, which could include projects such as building cycle routes; development of business tourism, since Latvia needs more large conference centres; and the promotion of Latvia in international markets.

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Tourism

©Valerijs Kostreckis |Dreamstime.com

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Grand Palace Hotel Riga

Boutique Hotel Focuses on Personalised ServiceGrand Palace Hotel Riga, the only hotel in Latvia that is a member of the prestigious Leading Small Hotels of the World and associated with Virtuoso network, has won numerous accolades for its facilities and services. The World Travel Awards have named the Grand Palace Latvia’s leading hotel for fi ve years in a row, and it is the local hotel of choice for state visits and VIP visitors.

Bernhard L. Loew, General Manager

With only 56 guest rooms, the hotel can offer personalised services for every visitor. “The Grand Palace has an impressive 50% rate of repeat visitors, in part because of our exceptional service,” says General Manager Bernhard L. Loew proudly. He adds that there are no plans to expand the Grand Palace. “We are a boutique hotel and we will continue to remain in that category. Our fi rst priority is to create a high level of hospitality and to make every guest feel welcome and happy here,” he adds.

The Grand Palace is ideally located in Riga’s medieval Old Town within walking distance of the city’s top attractions, shopping and cultural venues and business centres. The hotel’s intimate decor, a blend of

European and Russian styles, gives travellers a taste of the past, yet the Grand Palace also offers the latest modern amenities, including 24-hour room service, airport transfers, complimentary wireless Internet connection, a health club, massage services, and much more. Guests can dine at the hotel’s elegant Seasons restaurant or in the cosy Orangerie dining room with its vast glass roof.

Although it is a small hotel, the Grand Palace has ambitious goals for Latvia. Bernhard L. Loew is a leader in Riga Inspiration, a partnership between the public and private sectors to promote Latvia as a year-round tourism destination. “Riga is the unoffi cial capital of the Baltic, and is appealing not only in the summertime but also in the winter, for example at Christmas when our Christmas market opens in the main square,” he says.

For business travellers, the Grand Palace offers a fully equipped business centre and facilities for small conferences and meetings in its special meeting room; the staff can also help organise business lunches in the Orangerie restaurant. “One client reserved the entire hotel for a small retreat. We will always strive to fi nd the right solution to ensure the highest quality of service for every guest, whether a business or leisure traveller,” Bernhard L. Loew concludes.

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Tourism

Hotel Riga

Historic Hotel Top Choice among Business TravellersThe landmark Hotel Riga, ideally located in the heart of Riga’s picturesque Old Town facing the National Opera, is the perfect choice for travellers to Latvia’s capital city.

The stately fi ve-storey building with its classic stone facade was opened in 1878 as the Hotel Rome, and restored after the Second World War. Today, Hotel Riga is a completely remodelled four-star property with exceptional facilities and services. Guests enter the hotel through an airy lobby with parquet fl ooring, elegant chandeliers, leather armchairs and a cosy lobby bar, and foreign visitors are welcomed by multilingual staff.

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Unique central location

Hotel Riga offers magnifi cent views of Riga’s famous Monument of Freedom and the National Opera House and it is within walking distance of the city’s top business venues, museums and art galleries, restaurants and bars, shopping and cultural attractions. The concierge can book tickets for shows and events and organise sightseeing excursions.

The hotel’s unique central location, in fact, is one of the reasons the Kempinski luxury hotel group wants to bring Hotel Riga into its network. Venjamin Gurevich, Chairman of Hotel Riga, explains, “We aim for Hotel Riga to be a fi ve-star hotel under Kempinski Group management, and we have already signed a management agreement,

although upgrading to fi ve-star status will require signifi cant investment.”

The location of Hotel Riga is already fi ve star, and the hotel is well known for its facilities and services. “Our second key strategy is to re-invest our profi ts to upgrade the services of the hotel and to expand our facilities by adding full-serviced apartments for our business clients,” Venjamin Gurevich says. He adds that when the renovations are

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Hotel RigaSIA “Hotel Riga”

Aspazijas Blvd. 22, Riga LV-1050, LatviaTel: +371 67044222Fax: +371 67044223

Mail: [email protected]

Tourism

complete, Hotel Riga will offi cially become Grand Hotel Riga.

Luxurious amenities

The hotel offers 296 well-equipped guest rooms, including a honeymoon guestroom; most rooms are non-smoking. All the hotel’s guestrooms are decorated in stylish pale hues and are equipped with cable television, voice mail, minibar, trouser press and hairdryer. Guests can pamper themselves in the hotel’s sauna, hire a car or taxi from within the hotel, visit the beauty parlour, or try their luck in the Tobago casino. Wireless Internet access is available throughout the hotel.

Hotel Riga’s amenities include the popular Palm Garden restaurant, one

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of the city’s most elegant places to dine; it features gourmet cuisine and fi ne wines. Palm Terrace offers more casual dining, with a focus on salads and light meals. Guests can also enjoy a full buffet breakfast or have a drink in the lobby bar.

Top choice among business travellers

Only a 20-minute drive from Riga’s international airport and within walking distance of the city’s main train and bus stations, Hotel Riga is very popular among business travellers, who can make use of the hotel’s fully equipped business centre and conference facilities. Venjamin Gurevich points out, “We are focused on business travellers year round, and in the summer months we also welcome many leisure travellers and groups. Our occupancy rate is stable throughout the year. We try to be very fl exible concerning rates and reservation conditions, especially for our business clientele.”

Hotel Riga is known for its conference and banquet halls, which are very

popular for business meetings, banquets, weddings and other special events. The hotel has four conference rooms for meetings from 30 to 250 people and three banquet halls seating 120 to 300 persons. All are equipped with the latest technologies. The hotel’s highly trained staff can work with guests to organise any type of event, and catering is provided by the hotel’s Palm Garden restaurant.

In fact, according to Venjamin Gurevich, the management aims to position Hotel Riga as a top European destination for conferences and business meetings. As an added convenience for international travellers, the hotel offers a shuttle bus service to and from the airport.

A true taste of Latvia

Most of all, guests at Hotel Riga can get a true taste of Latvian life in this historic hotel which often hosts political fi gures and leading local and interna-tional leaders. The hotel welcomes guests from all over the world and aims to maintain its traditional charm even as it adds new upscale amenities. “We will be an historic hotel with a new approach,” Venjamin Gurevich concludes. He adds, “Visitors will fi nd the real Riga here at our landmark hotel.”

The European Times - Latvia

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